Refining Fitness Check

Refiners suffered a net loss of 0.47€ per barrel due to EU regulation from 2000 to 2012, accounting for a quarter of the sector’s decline in competitiveness. That was the result of the Refining Fitness Check published in December 2015 after almost three year of analysis. It provided clear evidence of the severe challenges facing the European refining sector, which have put the industry at a competitive disadvantage. The Fitness Check thus highlighted the urgent need for policy proposals to create an environment in which EU refining will not just be fit to survive – but also fit to invest
in. Only then will the industry be able to cope successfully with changing markets and global competition. The Fitness Check of the European refining industry was announced in the Industrial Policy Communication Update “A Stronger European Industry for Growth and Economic Recovery”, published in October 2012. The study is still in progress, and expected to be completed and published in the third quarter of 2015.

Fitness checks form part of EU’s efforts to assess the effectiveness of regulations and their impact on European industry; In particular, the focus is on competitiveness, jobs, and growth. Fitness Checks aim to “identify excessive burdens, overlaps, gaps, inconsistencies and/or obsolete measures which may have appeared over time.” 1

The refining Fitness Check is being carried out in two parts: A quantitative assessment, using a comprehensive analytical and data–based framework to map the evolution of refining since 2000, and a qualitative assessment, which will assess secondary legislation in implementation phase or very recently adopted. The study should then be completed by conclusions and recommendations addressing the potential gaps, inconsistencies or overlaps.

The Refining Fitness Check “should... take a critical and objective look at the cumulative effect of legislation on the competitiveness of our sector” 1

The Commission reported some preliminary findings of the Fitness Check at the Refining Forum meeting in December 2014, though no final conclusions and recommendations will be disclosed before June 2015. FuelsEurope reiterated its recommendations on the
process and the objectives of the Fitness Check: FuelsEurope believes that current EU regulations have added up to a number of severe challenges for the European refining sector. These challenges have put the industry at a competitive disadvantage, leading to the shutdown of several facilities. – Since 2008, 17 refineries were closed out of the 100 in operation. FuelsEurope therefore hopes that the Fitness Check will deliver a realistic picture of the pressures on the industry, and that these challenges will be clearly understood prior to the introduction of any new, potentially damaging measures.

The Fitness Check should assess the entire EU regulatory framework for the sector, including its impact on industry performance; how effectively it delivers EU objectives; and the coherence and consistency of the various pieces of legislation.

The check should thus provide a comprehensive and coherent picture of the impact of regulations on the competitiveness of EU refining. We also stress the need for an environment in which EU Refining will not just be fit to survive, but fit to invest in. The refining industry needs to invest in order to cope with changing markets and global competition, and investment decisions are affected by the legislative pressure the industry is facing within Europe. The Commission’s mandate for a Refining Fitness Check acknowledged that refining is “critical for EU’s industrial value chain, but urgently require(s) new investment to be made in the face of strong international competition”. Thus, we want the Fitness Check to assess to what extent the EU legislative framework for refining is conducive to investment or a deterrent to it.

Long-term investments are the result of future opportunities, not the glory of the past